By Gregory Hale
Safety is job one for a manufacturer, but it can also be a growth driver through risk leadership.
“Every 15 seconds one employee dies around the world in some type of work related accident,” said Cal Beyer, vice president and head of manufacturing of customer industry segments at Zurich North America during his keynote address Tuesday at Rockwell Automation’s Safety Automaton Forum in Philadelphia. “We have an opportunity as safety leaders to have an impact and make industrial automation safer.”
That is why Beyer said safety, insurance and risk management can lead the way for a company.
“The ability to learn faster than your competitors may be your only competitive advantage,” he said. “Risk leadership is when we can leverage risk to make a profit.”
Mark Eitzman, safety market development manager at Rockwell Automation, couldn’t agree more.
“Without profitability a business will not exist,” Eitzman said in his preamble to the keynote address. “What is the place of safety? Is safety seen as a balancing act or is a contributor to the health and security of the business?”
While Beyer’s business is insurance, he knows what a company needs to do to leverage all its assets – and that means safety. That is why he kept talking about how to create that competitive advantage. He also added a company’s reputation is “an intangible benefit that helps your company. Safety can truly be the source of competitive advantage because it can reduce the total cost of goods and the total cost of risk. It can impact image and reputation.”
To create a sustainable competitive advantage, Beyer said a company has to:
• Become or remain an employer of choice
• Experience less voluntary employee attrition
• Retain existing customer base
• Attract new customers
• Expand market share
• Enhance the ability to forge strategic partnerships and alliances
• Differentiate from competitors
He also listed the top common causes of supply chain disruption: Accidents, production problems, labor, natural disasters, sabotage/terrorism, financial loss, demand variability, physical
“Accidents are number one and we have the opportunity to have an impact to make our organizations safe and have a competitive advantage.”
“That is why the critical questions you need to ask: Is safety a source of competitive advantage? How does your company measure safety? Are you practicing risk management or luck management?” Beyer asked.
Safety, in the end, always comes down to culture and to what degree a company has it sewn into its very fabric of being.
“How do you know safety is embedded into your workers hearts and minds and embedded into the culture of your company?” Beyer asked.
It does seem safety is growing in the minds of companies as globally, frequency rates of injuries is decreasing. However, worker injury does remain the leading line of insurance in the U.S.
“Safety performance gaps are where accidents occur,” he said.”It is the difference between what is expected of us and what is accepted by company leadership.”
To make the business case for change, Beyer gave the following steps:
• Align safety focus with productivity and profitability results
• Dual focus: Loss minimization and profit maximization
• Shift to leading indicators to focus on prevention-based activities
• Calculate total cost of accidents and Total Cost of Risk
• Apportion premium and charge-back loss costs to operating units (departments/divisions)
• Fund for preventive and corrective actions from corporate budget (costly to have accidents, not to prevent them)
• Promote and incentivize through bonus managers & supervisors based upon both safety and production performance